New Delhi: The new Modi 3.0 government on Saturday (24 August) approved the Unified Pension Scheme (UPS) to modify the New Pension System implemented by the Atal Bihari Vajpayee government after 21 years. This will provide a constant Pension to the government employees after their retirement purposes. The scheme will be effective from April 1, 2025. The opposition had criticized the Center over the pension scheme for a long time.
Himachal Pradesh (2023), Rajasthan (2022), Chhattisgarh( 2022), and Punjab (2016): These are the states where NPS has been reversed back to the Old Pension Scheme. The center has made a big political gambit before the upcoming assembly elections in Jammu and Kashmir, Haryana, Maharashtra, and Jharkhand.
For instance, while till now the employee was given the option to select between the Old Pension Scheme and the New Pension Scheme, then he will also have another choice among choosing a New Pension Scheme, and the Unified Pension Scheme is sufficient under which employees were entitled to receive such life-time pensions equal to 50% of last basic salary.
Things to know about the Unified Pension Scheme (UPS)
A new pension scheme for government employees i.e., the Unified Pension Scheme (UPS) a guaranteed pension plan will be given to the employees under this. As per Union Information and Broadcasting Minister Ashwini Vaishnav, UPS has been built on 5 main pillars.
Fixed Pension — Under this scheme, the employees would be receiving a particular defined sum of money as their retirement benefit. This shall be a pension of 50 percent regarding the typical basic salary for the 12 months which is why contributions were credited to the user’s preceding date. Only the employees who have worked for 25 years or beyond, will get this benefit.
Fixed minimum pension — Employee will get Rs 10,000 as a pension if he has worked for at least ten years in case the employee is retired.
Fixed family pension — Family-related arrangements will also be available from this scheme. This pension will be given to the family of an employee after his death.
Inflation Indexation Benefit — DA will be provided to these three pensions based on inflation. The new DA is based on the All India Consumer Price Index for Industrial Workers.
Gratuity — In this, the employee will receive a sum equivalent to his last 6 months of salary and allowances. The next time it would have to be paid in a single payment. This will be 1/10th of the due employee’s last basic pay.
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The data showed that the pension liabilities (burdening) of the Centre and States have been growing unabatedly over the last three decades. The pension bill of the Centre in 1990-91 was Rs. 3,272 crore while total expenditure by all states combined amounted to only expenses! At the same time, by 2020-21, the bill of the Centre has climbed up to Rs. 1.90 lakh crore from its base level, and for states, it stood at Rs. 3.86 Lakh crore having increased over 125 times than in the base year for States.
Cabinet, led by PM @narendramodi Ji, has approved the Unified Pension Scheme (UPS), effective from April 1, 2025.
— Ashwini Vaishnaw (@AshwiniVaishnaw) August 25, 2024
🧵Understand UPS in 10 points.👇 pic.twitter.com/9EkO5v8QBi
India’s Prime Minister Narendra Modi said, “We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future.”
We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future.…
— Narendra Modi (@narendramodi) August 24, 2024
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Difference between UPS and OPS
On the difference between UPS and OPS, Somnathan said, “We will spend Rs 800 crore on the outstanding amount This will impose an additional burden of about Rs 6,250 crore on the government treasury to implement this. In the earlier pension system, an employee used to get half of the last salary as a monthly payment after retirement. This was determined by the basic salary of employees and rising inflation data. Under the previous pension scheme, a gratuity of Rs 20 lakh was provided. This cash was offered to the family of deceased retired staff.
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